Monday, March 22, 2010

A very useful snapshot of the health of the U.S. economy with a tight focus on the U.S. consumer, which is the driving force behind 70% of the U.S. economy's activity.

Consumer Metrics Institute: Home of Daily Consumer Leading Indicators... Bringing the measurements of critical economic activities into the twenty-first century by mining tracking data for an understanding of what American consumers were doing yesterday.

We feel that investors deserve information that is upstream economically, has daily resolution, isn't noisy or frequently revised, and is measuring what Consumers are actually doing in the current century. As one example of the net result of the above differences, the BEA's (U.S. Department of Commerce - Bureau of Economic Analysis) measurement of the 4th Quarter 2009 U.S. GDP lagged our trailing 'quarter' Growth Index by about 17 weeks...

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Another early measure of the 'double dip' possibility is shown in our 'Consumer Metrics Institute Trailing Two Quarters Growth Index Over Past 60 Days' chart (below). This chart measures the average growth reflected in our 'Weighted Composite Index' over the preceding rolling 183 day period, which corresponds to the 'two consecutive quarters' time span used in classical definitions of a recession. That 183-Day Growth Index slipped into net contraction on March 19th, 2010. Although the 183-Day Growth Index is a very aggressive and preliminary indicator for a recession, it is at least a sign that the much touted 'recovery' is not currently driven by enthusiastic consumers. We have always felt that consumers are not idiots and they understand what they see going on around them; they are unlikely to start another spending spree until the 'jobless' part of the 'jobless recovery' clearly begins to subside...